* Rapid growth in retail FX, partly driven by smartphones
* Some users trade only on mobile devices
* Some caution about “gamification” of trading
By Jemima Kelly
LONDON, Oct 20 (Reuters) - Once the preserve of big international banks, smartphones are putting the power to deal currencies into the hands of a new cohort of traders, who can make a fortune -- or lose their shirt -- on the bus to work.
Retail foreign exchange trading has grown rapidly in recent years, but the image has been of a lone trader in front of a computer screen. Smartphones, owned by around half the world’s adults, are changing that.
Mobile trading makes up about 60 percent of transactions, up from 10 percent four years ago, at London-based broker Trade 212, whose app has been downloaded over a million times. More than a fifth of clients trade only on smartphones or tablets.
“We are seeing a big number of clients who are not only mobile first, but mobile only,” said Ivan Ashminov, Trade 212’s co-founder.
Like others, Trade 212 offers demo accounts allowing users, largely male and mostly aged between 25 and 45, to practise with fake money. Many have no previous trading experience, Ashminov said.
Faheem Bismal, a 32-year-old father of two from Glasgow, sold his chain of convenience stores and restaurants two years ago to focus on property investment and trading currencies. He trades on broker FXCM’s smartphone app on the school run and in bed before he turns out the light.
When he only traded on his desktop and could not check the market when he was out and about, he was less successful, Bismal said. But he warns that the ease and accessibility of trading apps can be dangerous.
“I see guys sitting on their phones just tapping away, being in and out of the market within seconds or minutes ... and losing all their money. If you’re going to use the app you have to use it very sensibly.”
In 2013, the Bank for International Settlements estimated the value of retail currency trading at about $185 billion a day, or 3.5 percent of the market. Industry analysis website Finance Magnates reckons that figure is now closer to $320 billion. Smartphones, it seems, are helping drive growth.
Almost 40 percent of trading at IG, one of the world’s biggest retail FX platforms, is done on mobile devices, up from around 20 percent three years ago. In April, the firm became the first to offer a trading app on the Apple Watch, which vibrates when a user-set price is reached.
Some critics say “gamification” has made some trading apps appear more like harmless fun than opportunities to lose large sums. They argue it entices people with no knowledge of markets to expose themselves to risks of which they are not fully aware.
When the Swiss National Bank removed its currency cap in January, many retail traders suffered heavy losses, having held highly leveraged positions on the euro against the Swiss franc. Most of the retail traders Reuters spoke to about their losses had used smartphones for at least some of their trading.
But some argue that rather than encouraging reckless gambling, the new generation of apps, designed for smartphone users rather than modified from desktop sites, provide a less complex, safer environment for retail traders.
Flick A Trade is one trading app that looks and feels like a traditional computer game, complete with tense music and sound effects. It offers trading with “funny money”, while in “real money” mode trading sessions are limited to 3,000 pounds ($4,600), with losses not able to exceed bets.
“Over the years I have seen numerous black swan events ... which wreck not only retail investors but many companies, big and small, offering leveraged trading,” said Flick A Trade founder Kerem Ozelli.
Mobile trading apps can also give traders access to the same technology that until now has been reserved for the big banks.
“The lines between retail and institutional trading are becoming way more blurry,” said Jannick Malling, CEO of Tradable, a company that allows users to trade directly from news and analysis apps rather than via a separate broker’s app.
“Back in the day, only the institutions had access to the best tools in the marketplace ... and that’s becoming completely democratised.” ($1 = 0.6466 British Pounds) (Editing by Nigel Stephenson and Catherine Evans)